The USD/JPY currency pair continued its four-day rally, trading near 159.75 during the European session on Thursday, driven by a stronger US Dollar amid rising oil prices and the prolonged closure of the Strait of Hormuz [1]. The US Dollar outperformed its major peers, with the US Dollar Index (DXY) rising 0.2% to approximately 98.80, marking its highest level in over a week [1]. The USD was particularly strong against the New Zealand Dollar, gaining 0.48% [1]. Higher oil prices have contributed to increased US inflation expectations, which in turn have discouraged the Federal Reserve from easing monetary policy. According to the CME FedWatch tool, there is a 76.8% probability that the Fed will keep interest rates steady in the current range of 3.50%-3.75% at the December meeting [1].
Investors are also focusing on the upcoming preliminary US S&P Global Purchasing Managers’ Index (PMI) data for April, scheduled for release at 13:45 GMT. The data is expected to show growth in US private sector business activity, with improvements anticipated in both manufacturing and services sector output [1]. Meanwhile, the Japanese Yen traded mixed against major currencies as market participants shifted their attention to the Bank of Japan’s monetary policy announcement set for April 28 [1].
From a technical perspective, USD/JPY maintains a bullish near-term bias, supported by a sustained breakout from a Descending Triangle pattern and a rising 20-day Exponential Moving Average (EMA) at 159.11 [1]. The Relative Strength Index (RSI) is near 57, indicating constructive but controlled upside momentum [1]. The pair could potentially extend its gains toward the over 21-month high at 160.46, and a sustained move above this level would open the door for further upside toward 161.00 [1]. Immediate support is identified at the former resistance trend line around 159.41, followed by the 20-day EMA at 159.11 [1].
CONCLUSION
The USD/JPY pair is exhibiting strong bullish momentum, fueled by a robust US Dollar, higher oil prices, and expectations of steady Fed policy. Technical indicators suggest further upside potential, with key resistance levels in focus. Market participants are closely watching upcoming US PMI data and the Bank of Japan's policy announcement for additional direction.